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Recommended Changes to Downers Grove Stormwater Utility
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Recommended Changes to Downers Grove Stormwater Utility

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Recommended Changes to Downers Grove Stormwater Utility to be implemented during planning for FY2104 budget

Recommended Changes to Downers Grove Stormwater Utility to be implemented during planning for FY2104 budget

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Recommended Changes to Downers Grove Stormwater Utility Recommended Changes to Downers Grove Stormwater Utility Presentation Transcript

  • Recommended Changes for the FY2014Downers Grove Stormwater Utility Prepared by: Bill White Presented via email: March 20, 2013 Contact: BillWhiteDG@gmail.com
  • The Stormwater utility is an essentialelement of the Village’s long range financialplanning As of January 1, 2013 Downers Grove has the highest SWU fee in the State of Illinois. With 15 years of projected 11% increases, Downers Grove’s SWU fee could become the highest in the nation. As the SWU fee continues to increase - year after year - increased attention on the SWU can be expected, whether political attention or legal attention.March 20, 2013 Recommended Changes VoDG Stormwater Utility 2
  • Stormwater utility needs to be on asolid legal and political foundation Going forward, the stormwater utility should be amended to be on the firmest possible foundation, both legally and politically. The proposals contained herein will enhance the transparency and fairness of the utility, which is necessary for political stability. Also, dividing the revenue stream into distinct components allows severability in the event one or another aspect of the fee is challenged, whether politically or legally.March 20, 2013 Recommended Changes VoDG Stormwater Utility 3
  • Core Proposal:Adopt Multi-line SWU bill Divide the SWU bill into distinct categories: Annual O&M and Administration Storm Main Replacement Program Prior Debt Service New Debt Service and/or Direct expenditure on capital projects Total Budgeted SWU fee revenue Calculate each line item separately. Bill items 1 & 2 across the entire village. Bill items 3, 4 & 5 only within the watershed benefited by the improvement.March 20, 2013 Recommended Changes VoDG Stormwater Utility 4
  • Background:User fees versus taxes “Taxes are an enforced proportional contribution levied by the State by virtue of its sovereignty for support of the government” “Service charges, tolls, water rates and the like are, on the other hand, contractual in nature, either express or implied, and are compensation [for services provided]” People ex rel. County of DuPage v. Smith (1961) “[A] tax may be distinguished from a fee by observing that a tax is a charge having no relation to the service rendered and is assessed to provide general revenue rather than compensation. A fee, on the other hand, is proportional to a benefit or service rendered.” Church of Peace v. City of Rock Island (2005)March 20, 2013 Recommended Changes VoDG Stormwater Utility 5
  • “User fees” and “taxes” must not beseen as interchangeable terms The only Illinois Appellate Court decision addressing a challenge to a stormwater utility hinged upon “whether the storm water service charge was a tax upon real estate or a user fee.” Church of Peace v. City of Rock Island (2005) The Florida Stormwater Association offers the following bullet points as partial guidance to assuring that a charge is a fee and not a tax:March 20, 2013 Recommended Changes VoDG Stormwater Utility 6
  • Demonstrate a clear & transparent linkbetween fees charged & services provided When a stormwater utility is adopted to fill a budgetary shortfall, particular attention should be given to “fee versus tax” issue. With user fees, there should be an easily understood & transparent link between the fees charged & the services provided. Transparency as to how the revenue will be spent may be more important than transparency as to how the fees will be calculated and billed.March 20, 2013 Recommended Changes VoDG Stormwater Utility 7
  • Bill with precision within each sub-category and line item Operations: Bill only for actual expenditures budgeted for current year, not estimates. Storm main replacement: Bill only for actual expenditures budgeted for current year. Pre-existing debt service: Allocate by watershed benefited by capital improvement. Future debt service and direct expenditures for capital improvements: Allocate by watershed benefited by capital improvement.March 20, 2013 Recommended Changes VoDG Stormwater Utility 8
  • Disagreement on funding needed forRecommended Level of Service (O&M) 2006 Stormwater Plan - Clark Dietz - $1.3 million O&M budget Appendix H: “The Operations and Maintenance budget should be adjusted to approximately $1.3 million per year. This allows the Village to implement maintenance activities at appropriate frequencies, as recommended in this report. An additional 5 staff members are needed to effectively implement the maintenance program.” 2012 Exploratory Committee - MFSG - $3.4 million O&M budget “Exhibit 2 (see previous slide) shows that the recommended level of service includes O&M expenses that total approximately $3.4 million in 2013. It is important to note that incremental O&M expenses are not due to the formation of a stormwater utility but result from the increased maintenance activities identified in the Master Plan.” Q: Why the discrepancy? A: Possible answers include inflation, stormwater assets added between 2006 & 2012 & operational expenditures not included in 2006 estimates. Transfer of a portion of fleet & equipment expenses to Stormwater Fund could be another explanation.March 20, 2013 Recommended Changes VoDG Stormwater Utility 9
  • Going forward:Why quarrel over estimates? The O&M portion of the SWU fee could be set each year as needed to pay actual budgeted operating expenses, namely Lines 15 through 18 plus the fleet maintenance and equipment portion of Line 19 found in the Stormwater Fund (443) portion of the final approved Budget. For FY13 these amounts total approximately $1.8 million and only modest increases are projected for FY14 or FY15March 20, 2013 Recommended Changes VoDG Stormwater Utility 10
  • If SWU fees are user fees & not taxes,bill actual expenses not estimates Actual Operations: Lines 15 through 18 plus fleet maintenance/equipment portion of Line 19 of Stormwater Fund (443) Actual amounts budgeted to replace storm mains on 100 year cycle Actual debt service on outstanding bonds Actual Budget for Controlled Assets & Capital Assets (Lines 20 and 21) less bond proceeds applied to projects.March 20, 2013 Recommended Changes VoDG Stormwater Utility 11
  • Lack of transparency regardingdisposition of 2008 bond proceeds: How much money has actually been spent on Year Adopted Budget Actually Spent various capital projects isn’t easy to ascertain. 2008 $ 6.81M $ 2.45M 2009 Adopted Budget did itemize dollars as 2009 $12.45M $ 5.14M were actually spent on various stormwater 2010 $16.56M $ 4.89M capital projects. 2011 $ 9.50M $ 4.10M Subsequent budgets lack that detail.March 20, 2013 Recommended Changes VoDG Stormwater Utility 12
  • Street Projects orStormwater Projects? In the absence of itemized accounting for expenditure of 2008 bond proceeds, it is unclear whether funds were spent on stormwater projects or other types of capital improvement projects. No definitive Illinois legal authority exists for paying debt service with SWU fee revenue. The lack of a transparent accounting for the actual expenditure of 2008 bond proceeds undermines the premise that paying pre-existing debt service is a “fee for service” transaction.March 20, 2013 Recommended Changes VoDG Stormwater Utility 13
  • Going forward: Improve transparency forcurrent & future capital improvement plans Clearly disclose disposition of 2008 storm water bond proceeds. Which projects were funded by 2008 bonds & in what amounts? Increase transparent deliberation regarding choice of future capital projects. Empower the Stormwater & Floodplain Oversight Committee in the manner recommended in Appendix E of the 2006 Stormwater Master Plan.March 20, 2013 Recommended Changes VoDG Stormwater Utility 14
  • Allocate capital improvement costs ona watershed-by-watershed basis Downers Grove has more than five creek based watershed basins:  Lacey Creek, St. Joseph Creek (north branch & south branch) and Prentiss Creek are the backbone of drainage system.  Glen Park Tributary, Ginger Creek & Ward’s Creek / Sawmill Creek are additional watersheds within Village boundaries.March 20, 2013 Recommended Changes VoDG Stormwater Utility 15
  • One size does not fit all as the fivewatershed have different future needs Both 2007 WIIP & 2013 CIP show that the future needs of each sub- area are very different. A one-size- fits-all SWU fee isn’t fair & may be found arbitrary & capricious. Establishing subareas based on hydrologic connection are a cutting edge feature in stormwater utility rate structuresMarch 20, 2013 Recommended Changes VoDG Stormwater Utility 16
  • Analysis of future needs by watershed Watershed Acres % land area 2007 WIIP 2008-2014 2016+ CIPGlen Park Tributary 325 3.5% 1.0%Lacey Creek 2146 23.4% 28.6% ??.? 31.9%St. Joseph (N) 3221 35.1% 28.5% ??.? 23.8%St. Joseph (S) 1034 11.3% 29.4% ??.? 30.7%Prentiss Creek 2294 25.0% 13.5% ??.? 13.7%Knottingham 160 1.7% 9180 acres or approximately 14.34 sq milesMarch 20, 2013 Recommended Changes VoDG Stormwater Utility 17
  • Sample authority re: watersheds  Minnesota: “Water does not follow political boundaries; therefore the boundaries of a district follow the natural boundary of a watershed.”  New England EPA: “If a stormwater construction project benefits only a portion of a municipality, it can be funded by fees assessed only to those properties within that area . . .”  Florida: “Any facility benefit area containing different land uses which receive substantially different levels of stormwater benefits shall include facility benefit subareas which shall be assessed different per acreage fees from subarea to subarea based upon a reasonable relationship to benefits received.” § 403.0893, Fla. Stat. (1987)  (Pending) Illinois HB 1522 (Rep. Sandack is co-sponsor): “All fees collected by the County shall be held in a separate fund, and shall be expended only in the watershed in which they were collected.”March 20, 2013 Recommended Changes VoDG Stormwater Utility 18
  • Miscellaneous suggestion:For FY2014, repeal stormwater componentof Home Rule Sales Tax The FY2013 Budget included the following highlights:  Implements the Stormwater Utility  Reduces the Property Tax Levy by $1.98 million (15.2%)  Shifts $1.95 million of Home Rule Sales Tax revenue from the Stormwater Fund to the Capital Fund In 2007 Village increased Home Rule Sales Tax to fund stormwater improvements. December 18, 2007 minutes: Commissioner Tully commented that this ordinance increases the existing home rule sales tax from ½% to ¾% with the ¼% increase dedicated to the stormwater improvement fund. There is a sunset clause. If the Village creates a stormwater utility at some point, he asked that the Council reconsider altering some of the tax increases. The Mayor [Sandack] explained that the Council is adding ¼% to the Sales Tax for funding stormwater projects. He added that it is a discreet fund. If new funds were to become available, he agrees that the tax increases would have to be revisited. (emphasis added) Suggest abating $1.95 million in Home Rule Sales Tax rather than abating $1.98 million in property tax levy.March 20, 2013 Recommended Changes VoDG Stormwater Utility 19
  • Summary of Recommendations Adopt multi-line SWU bill with severable line items Only bill for actual budgeted expenditures Pro-actively disclose detailed accounting for all capital improvements paid for with SWU fees or paid for with debt to be serviced by SWU fees Allocate all capital expenditures & debt service by watershed Abate stormwater portion of Home Rule Sales Tax Empower Stormwater & Floodplain Oversight Committee as recommended by 2006 Stormwater Master PlanMarch 20, 2013 Recommended Changes VoDG Stormwater Utility 20
  • END OF PRESENTATIONMarch 20, 2013 Recommended Changes VoDG Stormwater Utility 21